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JC Penney's Misfire: What Went Wrong

This article is by Sara Rotman, CEO and chief creative officer, MODCo Creative.

Perhaps the biggest news within the retail industry at the moment is the sudden resignation of JC Penney’s president, Michael Francis. Only eight months after taking the helm at the retail behemoth, news of Francis’ abrupt departure was shocking to many.

(Image credit: Getty Images via @daylife)

Flashback to January 2012 – just six short months ago: In advance of the company’s new ads hitting market, there was a huge feeling of excitement and positive anticipation from within the industry. We all (myself included) eagerly awaited the roll-out of the company’s marketing strategy. If JC Penney’s strategy proved to be successful, it would quite literally revolutionize the way in which we all consider retail promotion – which would benefit not only JC Penney, but also all other retailers moving forward.

So, what went wrong?

Industry-Consumer Disconnect

If there is one thing that JC Penney did extremely well, is was communicate its strategy clearly and boldly to the marketing industry press. Industry insiders understood the company’s ambitious marketing strategy from the beginning and were downright giddy to watch Michael Francis’ plans unfold. After all, the man is heralded for establishing Target’s successful (and multi-billion dollar) cheap-chic image.

Given this, I think it’s safe to say that the industry was more than a little bit surprised and disappointed to see such a huge disconnect between what the company had planned to communicate to consumers – and what the ads actually conveyed about the brand. Had I not been following all of the reports surrounding the brand’s marketing strategy in advance of its launch, I would have been just as confused as JC Penney’s core consumers once those non-consumer-friendly ads aired.

Changing the Story

To start, the core messaging that the strategy was built on was not included within the advertisements. Local in-store displays simply did not reflect the company’s rebranded ethos. Then, most surprising to us all, the messaging was altered along the way. I remember seeing no less than three totally different iterations of ad campaigns during the initial relaunch. Whether this was planned or in response to consumer reaction doesn’t much matter; either way, it’s disconcerting as the imagery and point of view of each effort were incredibly confusing and dispirited, which is antithetical to a solid relaunch. Simply put, it appeared as though they were talking to themselves rather than to their customers – which is detrimental.

Misfiring and then making so many adjustments to a brand’s relaunch messaging immediately out of the gate is devastating to consumer confidence – and making so many quick changes in succession ultimately confuses rather than strengthensa brand’s image. Without consumer endorsement and understanding, a brand has very little.

Lack Of Internal Buy-in?

I believe that JC Penney has a strong desire to revitalize the brand’s strategy at the top of the corporate ladder. However, there appears to have been some difficulty (and perhaps even resistance) instilling the relaunch messaging down and across all units and sectors of the company – and therein lies the huge disconnect. In order for a marketing strategy to truly be successful, everyone must be on the same page. And while I acknowledge that it’s far tougher to change the direction of a large ship compared to a smaller vessel, it remains possible.

A Missed Opportunity… But Still a Chance for Something Revolutionary

It’s safe to say that JC Penneymissed a huge opportunity to reinvent its image and to do something truly special for the brand. As

Sara Rotman

an industry insider, my feeling is that the company entered into the brand relaunch with the best of intentions; however, those intentions were lofty, to say the least – and it takes time to reroute a ship of this stature.

With Francis’ sudden departure from the company, this missed opportunity lingers, and many question how the departure will affect the brand moving forward. JC Penney will continue to live, but moving forward, there will be far less opportunity for an innovative relaunch due to the anti-climactic misfire that the brand endured. In my opinion, a lot of money was ineffectively spent in an attempt to enhance the brand.

As it stands, CEO Ron Johnson has made the decision against hiring a replacement for Francis – which reinforces his need to dive in and be thenew brand “cheerleader.” Regardless of the direction that JC Penney plans to take in future, the following remains clear: The brand needs love, fortitude and a focused vision across channels to steer such a big ship.

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What everyone missed is that this was an attempt at a radical transformation and that it was going to take time and commitment. Yes, Ellen didn’t appeal to the traditional Penney customer. Yes, many regular customers weren’t going to like the new pricing scheme. They wanted to appeal to a new customer-base and change into a more upscale retailer, leaving loyal customers, who they viewed as unprofitable, behind. It was a big task and the big reward involved big risk. If their leadership didn’t have the stomach for some short-term losses then they shouldn’t have gone down this road.

Now let this be a lesson to everyone at Penney who ever thinks about big changes.

If this proves to be the failure it appears to be heading toward, I expect damaging long-term consequences for innovation and change in their culture, the kind of consequences that could spell doom as they will now be unable to aspire above competing in a bargain-shopper’s commodity market with the likes of Kohls, Macys, and yes, Walmart and Target.

Penney has a 100 plus years of being a traditional, family oriented, value driven store. Its customer base reflects this. Penney will loose its shirt trying to morph into something completely different. It will be a race to find a new customer (target demograhic) for every 2 former customers (current customer base) that they loose reaching for the new customer. The current economy may have some of their current customer base trading down, but when the economy eventually recovers so will those customer trade back up. Instead a total transformation, JCPenney should have made appropriate adjustments to maximize current customer base and expand.

Change into an upscale retailer? What planet are you living on? They changed into a low class retailer of the likes of Marshall’s or TJ Maxx. And where do conceivably put Macy’s in a bargain-shopper’s commodity market? Have you ever been to a Macy’s and looked at the prices or the more upscale brands that they carry? And they were already competing in the bargain-shopper’s commodity market under their old structure. In fact many of the sales that they had were similar to what Kohls’ sales were. Either you don’t get out much, or you have money to throw around and don’t notice prices.

It’s unlikely a single one of these people ever went into a Penney store to see who their customers really are. Hint: they aren’t trendy and very few are gay or metrosexual. They are in the main, overweight, lower and lower middle class either with a couple of kids or elderly on limited incomes. The ads are insulting and these folks may not have advanced degrees, but they’re not stupid and will take their trade where they’ve wanted.

Again, if this theory was correct, where are the “alienated customers” going to shop?

If all those conservative, middle-American, overweight moderate income shoppers have departed for another store, that other chain would be posting eye-popping gains. Yet there is no such chain posting such results.